By OGJ editors
HOUSTON, Aug. 8 -- Crude oil and natural gas futures contracts closed at new highs on the New York market Aug. 5 amid trader's continued worries whether world supplies can meet fourth quarter demands.
Adding to those worries is the fact that at least seven refineries have experienced unplanned outages in recent weeks. Meanwhile, production from those countries outside the Organization of Petroleum Exporting Countries continues to lag behind earlier expectations as demand keeps climbing.
"The ongoing nuclear tensions involving Iran are unnerving the oil market and carry with them the unlikely—but real—possibility of a military confrontation at some point in the foreseeable future," said analysts J. Marshall Adkins and Wayne Andrews in the Houston office of Raymond James & Associates Inc.
They also warned of other "wild-card countries," including Saudi Arabia, Russia, Nigeria, Venezuela, and Iraq. "While the risk of each of these individual oil supply disruptions is low, in the aggregate the oil market is facing what may be an unprecedented combination of potential risk factors," the analysts said. "Combined with another paradigm shift—the almost total lack of excess production capacity—this is catalyzing prices to move higher."
Energy prices
The September contract for benchmark US light, sweet crudes gained 93¢ to $62.31/bbl, the highest closing for a near-month contract in the 22 years that crude futures have been traded on the New York Mercantile Exchange. The October contract increased by 97¢ to $63.28/bbl. Gasoline for September delivery was up by 2.99¢ to $1.83/gal. Heating oil for the same month climbed by $2.34¢ to $1.73/gal.
The September natural gas contract jumped by 22.9¢ to a new contract high of $8.70/MMbtu, based on an earlier bullish report on US gas storage and a "firm Henry Hub cash market," said analysts at Enerfax Daily.
The latest "natural gas storage injection was lower than expected for the second consecutive week, confirming that there has not been any incremental 'backed-out' demand this summer," said Robert S. Morris, Banc of America Securities, New York, in an Aug. 7 report.
In London, the September contract for North Sea Brent crude gained 95¢ to $61.07/bbl on the International Petroleum Exchange. Gas oil for August increased by 75¢ to $531.50/tonne in that market.
The average price for OPEC's basket of 11 benchmark crudes increased by 22¢ to $55.29/bbl on Aug.5. So far this year, OPEC's basket price has averaged $47.81/bbl.
